Zomato plans to stop charging commission from restaurants

MUMBAI: Online restaurant discovery and food ordering platform Zomato will stop charging commission from restaurants that bring in high orders in a bid to strengthen its hold in the food-tech space and take on Nasper-backed food delivery startupSwiggy.

To be eligible for this, restaurants need to meet certain criteria listed out by the company. "Some of these criteria include the number of orders you process with us on a weekly basis, and whether your customers are happy with your food and service," CEO Deepinder Goyal wrote in a blog post on Monday .

The programme is likely to cover 70% of Zomato's 25,000-restaurant partner network in the country. Zomato currently charges 7% as commission fees from restaurants under its food ordering business, which does not include delivery and payment gateway charges.

Swiggy's commission fees are pegged at 1530%, but include delivery and payment charges. When contacted by ET, Swiggy declined to share details of their commission structure. At 3 million orders per month, Zomato currently lags Swiggy, which clocks around 4 million orders per month. However, the company has an edge over competition with higher average order value of Rs 430. But at Rs 350, Swiggy is not far behind on this metric.

The move to end commission charges comes after Zomato said it has turned profitable across all 24 countries where it has presence. Over the past 18-24 months, Zomato has been on a rationalising spree, having capped its annual operating cash burn by over 80% to Rs 77 crore.

The all-equity merger deal includes an exchange ratio of 4.39 HUL shares for each GSK Consumer India share, along with GSK entire operations of nutrition business and contract to distribute the latter's over-the-counter (OTC) and oral care brands such as Sensodyne, Eno and Crocin.